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Saturday, April 11, 2015

Ryan Holte on the Impact of eBay v. MercExchange

Posted by
Camilla Alexandra Hrdy

For anyone looking for recent evidence and analysis of courts' application of ebay v. MercExchange (2006) in the last few years, Ryan Holte has a new article in the Chapman Law Review, which he discussed yesterday at PatCon 2015. In the article Holte addresses eBay's impact on patent remedies on the ground and data on district courts' injunction grant rates. Much of this data is being collected by Chris Seaman, who also presented on post-eBay injunction rates at PatCon. Holte and Seaman are currently working on a joint empirical study regarding all Federal Circuit permanent injunction decisions post-eBay – this will certainly be worth a look.
Even if you don't share Holte's strong* view that district courts have misinterpreted and misapplied eBay in a way that is biased against individual inventors and non-practicing patent holders, the article is well worth reading for its discussion of recent evidence regarding eBay's impact and its comprehensive analysis of the facts surrounding the eBay case itself, which are rarely mentioned in discussions of the Supreme Court's ultimate holding.

The appropriateness of permanent injunctions versus "compulsory royalties" as prospective patent remedies is a notoriously difficult question to answer even as a matter of theory. (Ben Depoorter has an interesting piece on this, for example, where he argues the "[eBay] Court abrogated the well-established property rule entitling a patent holder to an absolute right to exclude and replaced it with a conditional property rule, which awards protection for patents based on the outcome of a balancing test completed at trial.") I hope that Holte continues to contribute to the equally complicated question of the actual effects of eBay's mixed rule on all actors in the patent system, including practicing companies such as eBay and "failed start-ups" like MercExchange, and its broader effects on patent licensing and commercialization and innovation overall. Holte generally favors a case study approach over mass empirics, which I find refreshing and valuable. But it obviously comes with severe limitations and is open to biased selection of review subjects. Especially when combined with Seaman's high-level empirical analysis, I anticipate this being a wonderful project.

* Here is a quote from Holte's abstract to give you a flavor of his views on the subject:

[T]he case has largely been misinterpreted by district courts and others for various reasons including: improper reliance on Justice Kennedy’s concurrence; misleading media coverage; eBay’s public relations efforts to spin media attention in its favor; a district court judge generally biased against patent owners and uniquely concerned with the wide disparities between the parties, the motives of MercExchange, and the vast consequences an injunction may bring against the world’s largest auction marketplace...